How prices are set in the stock market can seem like another reality at times. Investing in stocks requires some knowledge of the factors that drive stock prices up or down.
These articles cover some of the factors that may push stock prices up or cause them to drop. Once you understand the basics, stock prices begin to make more sense.
Although you may think the market moves in a rational manner that is not always true. Fear and greed are important factors in which way stock prices move. This is reflected in supply and demand for stocks.
How Stock Prices Are Set
The balance between supply and demand sets stock prices. When demand is high and supply is low, prices rise. When supply is high and demand is low, prices fall.
Supply and Demand Drive Stock Prices
Stock prices are driven by the relationship between buyers and sellers. Attractive stocks have more buyers than sellers, which drives up prices, while less attractive stocks feel the reverse effect.
Bull and Bear Stock Markets Two Sides of Same Coin
Bull and bear markets go together and are necessary for an efficient market.
Following the Stock Market Herd Often Wrong Decision
Momentum in the stock market can be a powerful force, but it is often wrong because it is driven by emotion and not logic.
How Low Can Stock Prices Go?
Investors sometimes forget that there is no guarantee with stocks. They could lose their entire investment.
Understanding What Affects Stock Prices
Investors are buying future growth when they invest in stocks. Yet, the stock's price may float up or down based on some broad market or economic factors that may only indirectly affect the company.
How the Fed Affects Stock Prices - What the Fed Does
The Fed is the single most important federal agency for stock market investors because its actions directly affect the markets.
Articles in This Series
How Stock Prices Are SetSupply and Demand Drive Stock Prices
Bull and Bear Stock Markets Two Sides of Same Coin
Following the Stock Market Herd Often Wrong Decision
How Low Can Stock Prices Go?
Understanding What Affects Stock Prices
How the Fed Affects Stock Prices
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